The words “pandemic,” and “depression” hold true on more levels than one. Today, however, we explore what the statistics actually tell us about San Diego’s housing market. Surprisingly, there are several positives that suggest the future may be brighter than anticipated.
Facts and Stats Paint a Positive Picture of San Diego’s Housing Market
Let’s begin with some background data. June showed a positive upward trend, with our unemployment rate staying below the California average. A new COVID-19 surge could hurt those numbers. However, the retail, entertainment, hospitality, transportation, and utility sectors rehired furloughed employees in June.
So, we have every confidence that hiring will rebound in the event of another short-term downturn. Lower unemployment, government help, and San Diego’s historical resilience all contribute to a vibrant real estate future. Positive factors exerting an influence include:
- Continuing financial support for individuals and families.
- Government support for businesses.
- Record low-interest rates for borrowers and homeowners.
- Banks working with borrowers on mortgage forbearance plans, so they are less likely to default on their mortgages.
- San Diego City’s rent relief program, helping both tenants and landlords.
All of these mean the majority of San Diego residents can rely on a financial cushion of some sort to support them through the rest of the year.
How That Reflects in Our Real Estate Market
The August San Diego Association of Realtor report states that “the competitive market for buyers shows little sign of waning.” People want to live in San Diego County for many reasons.
First, we have always had a historically strong real estate market. And, due to the rise in remote work, people want to live in a locale that mirrors their lifestyle. New construction this year will deliver fewer than 10,000 homes to the market (as has been the case since 2017), so the demand for existing properties should remain solid.
There are fewer homes being listed, so the buyer demand is keeping prices stable. The report also says that high buyer activity is expected to continue into the late summer and early fall. Let’s now discuss some specifics.
On July 28, The San Diego Union-Tribune compared San Diego’s property value increase this year to other metropolitan areas. Sure, COVID-19 has affected supply and demand levels everywhere. Yet, the numbers tell us that San Diego’s housing market is holding up well with an annual increase of 5.2% compared to:
- Los Angeles: 3.7%
- San Francisco: 2.2%
- Portland: 4.2%
- Las Vegas: 4.2%
- Dallas: 2.1%
- New York: 2.1%
- National Average: 4.5%
San Diego Real Estate: Comparing February and July 2020
Before the pandemic hit, our market was strong. If we compare February to July, we see that San Diego’s real estate market is still looking positive. For detached and attached homes, we see that July’s figures (compared to February) are:
- New Listings: Detached listings are up 17%, and attached listings are up 33%.
- Median Sales Price: Detached median prices are up 7%, while attached median prices are up almost 4%.
- Average Sales Price: Detached average sales prices are up 9.9%, while attached average sales prices are up 4.4%.
- The average list to sell price in July is 99% and 99.1% respectively, indicating that sellers aren’t accepting lowball offers. They are listing for higher prices than they would have in February and selling for close to their asking prices.
Days on Market stats reinforce a positive market. Essentially, properties at or below $250,000 were on the market for an average of 39 days. At the other extreme, $5 Million+ properties took an average of 112 days to reach a “pending” status.
We see the same positivity if we ignore prices and consider only square footage. Homes of less than 1500 sq. ft. were on the market for an average of 25 days. Meanwhile, homes at 6000 sq. ft. and above sat for 106 days. These timescales are almost identical to those for July 2019.
Lender-Mediated Sales in San Diego’s Housing Market
If we look at July 2020, closed lender-mediated sales rose 0.4% to 243 with a median sales price of $617,000. Meanwhile, traditional median sales prices rose 10.3 percent to $645,000.
The Future of San Diego’s Housing Market
No one has a crystal ball. Sure, the forecasts for the next few months may differ from that for next year, but not by great amounts. Beginning with San Diego’s current property values (residential, commercial, and industrial) the Union-Tribune says that, at $640 Billion, it is at a record level.
Some economic forecasts suggest a drop of 1.8% in the next few months followed by a rise. Meanwhile, Haus, a real estate co-investing company, predicts that homeownership rates will rise in the coming decade. For now, home inventory levels remain low. However, market demand should help maintain a strong median sale price. According to the SDAR report above, mortgage applications are still higher now than last year. Therefore, strong buyer activity should continue.
In a nutshell, the San Diego real estate market is stronger than in most major cities. With continued government support and positive lender actions, buyer activity will continue its rising trajectory. So far, the future looks good.